Covid-19: Tito Mboweni says their economic response to coronavirus is data-dependent too
Minister of Finance Tito Mboweni says even in crisis there is opportunity is to address our problems and challenges.
Minister of Finance Tito Mboweni briefed the media on Tuesday, 14 April on the recent downgrade by rating agencies Moody’s and Fitch and the National Treasury’s efforts to limit the economic impact of the Covid-19 outbreak.
Mboweni urged South Africans to continue to stay home unless they needed to be outside. He said the Department of Health’s approach to Covid-19 has been data-dependent, “Similarly, our economic response will be data-dependent, and we will evaluate and update our response on a continuous basis.”
He acknowledged the decision by the Monetary Policy Committee of South African the Reserve Bank to further reduce the repo rate to 100 basis points which is now at 4.25 per cent, “Their flexibility and willingness to act speedily is similar to the approach of many other central banks.”
The finance minister said they have mapped out internal scenarios of the economic impact of different types of lockdowns, including different paths for fiscal deficit, for government borrowing and for a fiscal response.
Minister @tito_mboweni briefing the media on Covid-19 and economy says, "going into this health care crisis, the economy was already in recession. Without doubt, given what we know since February, COVID-19 will certainly further deepen the South African downturn woes."
— National Treasury (@TreasuryRSA) April 14, 2020
Minister @tito_mboweni briefing the media on Covid-19 and economy says, "every crisis is an opportunity for us to address our problems and challenges."
— National Treasury (@TreasuryRSA) April 14, 2020
He explained that the central scenario is a deep recession in 2020 followed by a rapid upswing in economic growth, however, the path relies on an understanding of how the global economy will adjust.
Minister @tito_mboweni briefing the media on Covid-19 and economy says, "we are in constant conversation with teams at multilateral bodies, domestic, local economists, & @SAReserveBank. We are also monitoring domestic & global high frequency data to ensure that we understand well
— National Treasury (@TreasuryRSA) April 14, 2020
The Reserve Bank expects the GDP to contract by 6.1 per cent, GDP is expected to grow by 2.2 per cent in 2021 and by 2.7 per cent in 2022, Mboweni added.
He concluded, “As a small open economy we regularly experience external shocks. For this reason, we have chosen a flexible exchange rate and monetary policy that is anchored by an inflation target.”
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